In California, most real estate transactions are closed with a title insurance policy. Many home buyers just assume that when they purchase a piece of property, possession of the deed to the property is all they need to prove ownership. This is not true. Hidden hazards may be attached to real estate. A property owner’s greatest protection is aPOLICY OF TITLE INSURANCE . . .
What is Title Insurance
It is a contract of indemnity which guarantees that the title is as reported and, if not reported and the owner is damaged, the title policy covers the insured for their loss up to the amount of the policy.
Title insurance assures owners that they are acquiring a marketable title. Title insurance is designed to eliminate risk or loss caused by defects in title from the past. Title insurance provides coverage only for title problems which were already in existence at the time the policy was issued.
The Title Search
Title companies work to eliminate risks by performing a search of the public records or through the title company’s own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded liens or encumbrances or any other matter of record which could affect the title to the property. When a title search is complete, the title company issues a preliminary report detailing the current status of title.
The Preliminary Report
A preliminary report contains vital information which can affect the close of escrow: Ownership of the subject property, where the current owners hold title; matters of record that specifically affect the subject property or the owners of the property; a legal description of the property and an informational plat map.
